The Afflictive Cost of Foreclosure

Everyone cognises the price of foreclosure on home owners. They turn a loss a place to experience, their credit rating, whatever down payment they progressed to, their hopes, their dreams.

Modern numbers from ratings agency Received & Poors spells out out the cost to mortgage investors. For the 2006 vintage of subprime loans it’s about 19% of the loan comes great.

How do they catch those numbers? S&P figures an amazing 42% of the loans named that year to borrowers with spoiled credit will go into foreclosure. And then it calculates that around 45% of the amount owed on those loans will be turned a loss. Hither’s the breakdown on that: 19% is turned a loss referable to the decline in the market value of the home. That’s about a $40,000 loss on a distinctive loan of $210,000.

Then there is the 26% lost to the costs of foreclosure. It can conduct a year or more to see the hale process from when a borrower stops anting up to when the house is ultimately betrayed and the lender recoups whatever money it can. There’s 13.6% of the loan amount lost in interest payments. Or so 3% of the home value the lender has to pay in property taxes. There’s 1% in sound fees, 6% to existent estate agents, about 3% of the loan spent on home maintenance.